Why do you think Barack Obama is being so nice to Michael Bloomberg?

On a pale-gold mid-October afternoon, Sarah Palin takes the stage at the San Jose Center for the Performing Arts, and the faithful are ready for her. The crowd, 1,500 strong, is mostly white, on the older side, and casually dressed—though in my row there’s a hulking young Samoan in full Revolutionary War regalia. For the past hour, the audience has been treated to a series of warm-up acts that aren’t your typical Northern California fare: a choir called Celestial City; the head of the outfit sponsoring the event, the Liberty & Freedom Foundation, who speaks of a conservative “reawakening”; and a local talk-radio host whose shtick is that of a bargain-basement Glenn Beck, replete with attacks on Karl Marx, Richard Nixon (for creating the EPA), Nancy Pelosi, and, of course, “Barack Hussein Obama.”

Palin’s own brand of performance art is no less barbed and no more subtle, but still infinitely fascinating. In a deep-blue jacket and tight black skirt, she uncorks a 40-minute soliloquy that is equal parts populism, moralism, stand-up comedy, and free association, all rendered in a syntax as fractured as Joe Theismann’s tibia after Lawrence Taylor got through with him. She doles out personal, if possibly fictitious, anecdotes that position her, despite the millions she has pocketed in the past two years, as a defiantly downscale girl: that she and Todd drove their motor home from Wasilla to Los Angeles (distance: 3,375 miles) to watch Bristol on Dancing With the Stars. She winks (metaphorically) at her pop-culture image, snapping off a “you betcha” and later declaring, “November 2 is right around the corner—I can see it from my house!” She rails against union bosses who are “thugs” and “elitist billionaires who are funding the leftist agenda,” while gaily mocking Obama, Pelosi, Barbara Boxer, and Jerry Brown: “They act like they’re permanent residents of some unicorn ranch in fantasyland.” She invokes the California of old as a paradise lost and declares that it must be regained: “I want you all to get to yell ‘Eureka’ in this Golden State of opportunity.” And she cites Ronald Reagan in promising the same for the country: “If we do our part, as President Reagan said … the great confident roar of American progress, growth, and optimism will resound again!”

This is a stump speech—or, at least, it sounds that way to many in the crowd. With each stanza, their cheers for Palin escalate from loud to deafening, and by the end, more than a few are shouting out, “Run, Sarah!” and “Madam President!”

Until not long ago, the only people who took seriously the notion that Palin would make a White House bid in 2012, let alone win the Republican nomination, were those who really do live at the unicorn ranch—and spend their time there huffing pixie dust. When Palin quit the Alaska governorship in 2009, her political career seemed over. And even after she resurrected herself, emerging through her media ubiquity and her aggressive endorsement strategy as arguably the most powerful figure in the GOP, much of the political world believed that she was animated by non-presidential motives. To further pad her bank account. To redeem her reputation. To turn herself into the party’s preeminent kingmaker. Or possibly all three.

But today the conventional wisdom about Palin is being revised again, nowhere more so than within the ranks of professional Republicans. Among two dozen senior strategists and operatives with whom I’ve spoken in recent days—including many of those responsible for securing the nomination for the party’s last three standard-bearers—there is a growing consensus that Palin is running or setting herself up to run. All agreed that her entry would radically and fundamentally transform the race. Most averred that if she steps into the fray, she stands a reasonable chance of claiming the Republican prize. Indeed, more than one argued that she is already the de facto front-runner.

For many Republicans, a Palin nomination would be a shrieking nightmare—just as for most Democrats, it would be a wet dream. (Asked about the possibility by reporters, David Plouffe, Obama’s 2008 campaign manager, quipped, “Something tells me we won’t get that lucky.”) The emotions here are diametrically opposed but based on a shared conviction: that Palin, whose national approval rating in a CBS News poll this month stood at a lowly 22 percent, is irredeemably unelectable, and thus her nomination would essentially guarantee Obama a second term.

Or would it? In a two-way contest, almost certainly. But what if a Palin nomination provoked a credible independent candidacy? What if the candidacy in question was that of, oh, Michael Rubens Bloomberg? What would happen then?

That’s a lot of ifs, I hear you saying, and you are not wrong. Yet none of these twists is actually all that implausible. In fact, the likelihood of Bloomberg’s running is just as great as, if not greater than, it was when he considered taking the plunge in 2008—and that specter is very much on the minds of Obama’s people. In the past few months, the White House has made a gaudy show of sucking up to the mayor: inviting him to play golf in Martha’s Vineyard with Obama, floating his name as a potential Treasury secretary, dispatching Joe Biden and Tim Geithner to have breakfast with him and seek his economic counsel. The motivations behind the blandishments are many, but not the least is to blunt the Bloomberg threat—to keep him on the sidelines in 2012, where he and his billions would pose no danger of redrawing the electoral map in unpredictable and perilous ways.